Determining the rent for your rental property is an art and a scientific process. You can not just impel the rent that you want for your home because there are other external factors that you need to consider in setting the accurate amount of rent for your property. You need to price your rent correctly because if you will ask too much, potential tenants will just ignore you and go to rental homes with lower rates. On the contrary, if you charge too low, people may rush to your property to become your tenant but there is no guarantee that you will generate more money to spend for all the maintenance cost of the property.
Setting rent for your rental business can not be determined purely by guessing numbers. Do market research.
1. Analyze the Market
Research about the rent other landlords in your area collect for monthly rent. Begin your research by finding “for rent” homes in publications like news papers, magazines or on the web. Look for homes that you consider similar to your property within your area. If the price of rent is not reflected in the advertisement, call the contact person and pretended that you are looking for a rental home. Then ask questions about the property: the price, the amenities, the floor area, etc.
You can also discuss this matter to someone you know who has a professional interest in property or real estate. Otherwise you can seek for the professional help of property management firms in your area. Their service can be of great advantage to your rental business because they have access to sufficient knowledge and information about what rental rates are appropriate for properties similar to yours.
If you are a first time landlord, you can ask someone who really understand the market and who has the experience in rental business. Listening to their advice can guide you in making real estate decisions.
2. Forecast Market Trends
For you to thrive in any business you have to keep yourself updated with information about market prices. Look at listing sites or ads at least once a week. Observe what is happening at the apartment complexes. If you notice that they are one month of free rent, this simply means that there is a high rate of vacancy. If the units are increasing rent, then there had been a move in the market that is in favor of landlords.
3. What's the Cost of Living?
Another basis of setting your rent is the cost of living in your area. Did the Consumer Price Index (CPI) increase? Usually, when the prices of goods and services in your area rise you can expect that the rental rates will soon climb up, as well. However, you also have to consider the financial capacity of the renters. If you will price your rental home with high rent prospect tenants you will just ignore you and look for other homes in your neighborhood.